In my opinion Wal-Mart is not a cause it is an effect. Societies, which I
analogize to ecological systems, must behave, as all ecological systems
must. Each organism no matter how insignificant it is perceived performs a
vital function in the support and maintenance of the system. There must be
and will always be individuals willing to work in jobs at all levels and
receive whatever wages offered that a societal system needs to function. I
donıt know why but if something needs doing someone will appear willing to
do it at the wage offered. In a society everyone will not be wealthy or
middle class. Equally there are jobs that need very little in the way of
intellect or physical skill that are vital to the efficient functioning of
society.

Perhaps an understanding of this would make the idea of subsidizing
low-income earners more palatable to higher income earners. It would be even
more beneficial and sensible if corporations understood their connection to
their employees and voluntarily offered wages that allow the most menial
worker to provide for his/her basic needs without handouts; this goes to the
very core of human dignity and independence. Not doing so will eventually
give way to distortions that will grow until no longer sustainable. In other
words a ³Let them eat cake² attitude has always proven to be costly.

As a sidebar, with all due respect, asking why people would show up in
droves for employment at Wal-Mart is like asking why a starving man would
eat a meal out of a garbage can. If meaningful employment is as plentiful as
this administration espouses why are there long lines for Wal-Mart jobs?

Wage arbitrage is not new (Andrew Carnegie imported labor from Europe when
Americans refused to work in his mills under the conditions and wages
offered).

Imbalances that naturally occur in all natural systems are eventually culled
out so that a new cycle can begin. As it pertains to human society the rise
and fall of major and minor societies, revolutions (political/labor), social
disorder, wars, etc., empirically appear to be attempts by the human psyche
to achieve equilibrium at various levels. This equilibrium either doesnıt
exist or is not fixed and therefore is unachievable. Distribution of wealth
leads time and again to the concentration of wealth. Expansion leads to
contraction.

The current disequilibria seems to be the effect of the global fiat
currency/fractional reserve banking experiment where the constant
injection/expansion of credit at an exponential rate is needed to keep the
game going. As long as all partners to this experiment keep up their end of
the bargain symbiosis is achieved, of course until the point of diminishing
returns or when a party or parties no longer find the arrangement
beneficial. At this point no matter what is done the system breaks down and
the cycle renews.

The very fact that no one knows how this experiment will end implies the
central banks of the world are not in control of anything. Since no fiat
currency has survived history gives us the probability of 100% failure.

Without the global wage arbitrage currently underway I speculate that the
U.S. credit binge (exponential debt expansion) in which cheap labor plays an
integral role, which in turn has led to the illusory ³wealth effect² could
exist. China probably would not be expanding at its current parabolic rate
and Japan would probably be in a deep depression.

Ravi Battra, in his book Greenspan's Fraud, hypothesizes that the
relationship of wages to profits on the balance sheet explains why companies
can be profitable while wages lower or stagnate. I will not go into the math
but to summarize, if wages no longer have to be expensed because the
consumer/worker is borrowing to buy goods and services from the corporation
then wages appear on the bottom line as earnings instead of an expense. If
this relationship is true then corporations ability win at beat the number
will disappear in direct proportion to consumers/employees ability or
willingness to borrow to maintain a particular lifestyle (maintain rate of
consumption). In other words the collapse credit expansion could cause
corporate earnings decline suddenly and sharply. Perhaps your missive ³They
canıt have it both ways² suggests we have arrived at an inflection point.
Once again history doesnıt offer much evidence in the way of ³soft landings²
or ³muddling through² in the aftermath of such large distortions.

I blame no one in particular because in order for the situation to exist
there must be active or passive complicity by all parties (there must be
individuals, governments or corporations willing to lend and those equally
willing to borrow). At the point where credit can no longer be expanded at
the rate necessary to support the system whether by a lack of willing
lenders or borrowers the system goes into a positively reinforced feedback
system of corrective movement. Are we at the point where hyperinflationary
or deflationary collapse or one leading to the other is the only choices on
the menu? I donıt know. Bon appetite.

Once again to sidebar: there are many seemingly independent forces at work
that are actually functioning as one. Already we see countries positioning
to secure and control energy resources. "No wars for oil" stickers may be
well intentioned but are naïve. At least for the time being all
industrialized countries rely on oil or face serious problems. Our ability
to project militarily for national security concerns depends on oil. Iran
knows this and in conjunction with its understanding of the tenuousness of
the current economic climate will keep pressure on oil prices in hopes
forcing a financial collapse. We must face the fact that there are not
enough resources to go around to maintain highly consumptive economies
worldwide. This alone will eventually lead to instability of some sort. Our
military commanders are well aware of the potential for outbreaks of wars
over vital resources and have war-plans in place for such occurrences.

In summary, Wal-Mart is filling the role it needs to at the moment but will
reap what it sows. All corporations, large and small need to understand
their inseparable connection to their employees and realize that their
actions unfold in and shape the American economy, which affects the global
economy, and act responsibly.

Probabilities are high that a serious prolonged global economic dislocation
will occur. Since we cannot depend on our elected officials to have the
courage and wisdom to act, perhaps we should all be preparing to take
advantage of the situation even if for no other reason than to preserve
purchasing power. In all disasters those who either recognize in advance and
prepare appropriately or are able to effectively adapt flourish.

Best regards,

Harun

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